Treasury and Economic Affairs Committees call for flawed inflation measure fix

Would reduce investor payments by £1bn a year

The Treasury Select and Economic Affairs Committees are looking for consent from Chancellor Philip Hammond to fix the flawed retail price index (RPI), in a move that could reduce payments to investors by £1bn a year.

The two committees have written to the UK Statistics Authority (UKSA) to urge the Chancellor to allow statistical errors in the RPI calculations to be corrected. The Economic Affairs Committee said last month that statistical errors in the formula to calculate RPI accounted for 0.3 percentage points of the 0.8ppt it usually exceeds Consumer Price Inflation (CPI) by. The statistical errors lead to a £1bn yearly windfall for index-linked gilt holders as RPI is the measure used to repay government bonds. Feeling the pinch: UK inflation on the rise Treasury Select Committee chair Ni...